Homes becoming more affordable: Report

Homes becoming more affordable: Report

Canadian homes became more affordable in first quarter 2014, though affordability is still at a 25-year low, according to Desjardins’ Affordability index.

"The financial capacity of Canadian households to purchase a property improved somewhat at the beginning of 2014, even though average home prices matched the pace of after-tax income growth,” the report states. “Lower mortgage rates therefore had a favourable effect on affordability.”

The index is calculated by determining the ratio between average household income and the income needed to obtain a mortgage on an average-priced home in a given city.

Toronto and Vancouver continue to be two of the least affordable major markets with average house prices of $547,340 and $801,554 respectively.
And house prices across Canada continue to rise as a result of record low interest rates, according to Desjardins.

“The drop in mortgage rates held off any noticeable cooling of activity. Prices continue to rise across Canada, particularly thanks to advances in certain agglomerations,” the report states. “For a year now, price increases have exceeded eight per cent in Toronto and Vancouver, fuelling similar increases across the country, while stability reigns in Montreal and sets the tone for the provincial average.”

While affordability is expected to maintain its current levels, condos are due for a correction due to a current unabsorbed surplus – making them more affordable as time goes on.

“Since condo prices will continue to adjust until the surplus is absorbed, the hike in single-family homes will hold off a widespread decline. Affordability should therefore hold steady around its current level until mortgage rates begin to rise,” the report states. “The stabilization period for property sales will therefore be extended this year, as will the pause observed in prices.”

Canadian homes become more affordable in the first quarter of 2014. What a load of nonsense. Where do these one would presume are human beings who come up with these headlines come from? The prices of properties are way, way overvalued. All of them, especially in the larger cities. People can't afford them. That is reality. The major majority of all properties are mortgaged to the hilt and they are as such so as people can borrow to live. What would one do without index's in the World of course. Someone at least has a job there. That is a good thing.